It is essential that HR observes US employment law when sending employees to
work there. Liz Simpson examines the wide-ranging differences enforced in the
US from state to state
To outsiders it may appear to be one country, but in reality the United
States is a confederacy of 50 states – and this is never more apparent than
when having to get to grips with US employment law. Three different types of
statutes apply here. Federal law offers basic safeguards on nitty gritty
employment rights such as minimum wage rates, overtime payments and workplace
safety. State law covers more detailed issues relating to any contractual
arrangements. And then there are the more localised municipal laws.
Andrew J Boling of global practice Baker & McKenzie, explains,
"Employers in the US generally have the discretion to change the terms of
compensation, working hours and other issues such as holiday without the
employees’ consent – as long as there is no written contact between them.
"Many European companies, used to employment laws that state the
contrary, don’t realise that the practice of confirming employment terms is not
required in the US. Hence they frequently give employees more rights than they
are entitled to under US law. However, once Pandora’s box has been opened,
State law will ensure the employer abides by those written entitlements."
Municipal laws, operating at City level, can impose more substantial
objections and penalties on an issue the other two laws also cover –
discrimination. While the savvy HR professional can take advantage of the
plethora of free expert advice on US employment law (www.bakernet.com, for
example), guarding against charges of discrimination involving age, gender,
ethnicity or sexual orientation plus claims of sexual harassment, requires
constant vigilance and pre-emptive action.
Philip M Berkowitz is chair of the American Bar Association Employment Law
Committee (International Law Section) and a partner in the employment law
department of Salans, Hertzfeld & Heilbronn in New York. He says overseas
expatriates are often a source of liability in the US because they have not
been properly appraised of the legal issues.
"The US is the only country which has jury trials and high exposure for
claims such as sexual harassment and age discrimination. US discrimination laws
and the punitive damages permitted are subject to ridicule in many European and
other countries where Americans are considered overly sensitive.
"Maybe that is true, but US culture does not permit certain practices
and executives who walk in without sufficient training – and don’t take their
obligations that our statutes demand seriously – risk getting their employers
into trouble in a substantial way," says Berkowitz.
Even the best-run companies can fall foul, as Coca-Coladiscovered (to the
tune of $192 million) when it recently settled a class action lawsuit filed
against it by a group of employees who felt the company’s standard operating
procedures discriminated against minorities.
"The courts have recognised the system has become very dangerous for
employers. As a result, those who take careful steps to monitor their HR
practices and provide relevant training, who make explicit that certain conduct
is prohibited and who follow up on complaints with the appropriate time and
energy, can avoid such penalties even if discrimination has occurred,"
Boling agrees that forewarned is forearmed, "Emphasis should be given –
ideally to all employees but certainly to any executives being expatriated to
the US – that even an innocent or well-intentioned remark may be in violation
of local laws."
Don’t think that just because your company is adhering to laws acceptable in
your own country these will be honoured in the US. Adds Berkowitz, "One of
our clients is a German multi- national whose employment practice in Germany
prevented employees over a certain age rising beyond a certain level in the
company. US courts are increasingly allowing defendants’ overseas employment
practices to be admitted into evidence – and juries are drawing adverse
inferences from them.
"My clients discontinued that practice, even in their own country,
because of the possibility that they would risk a claim of age discrimination
in the US and the attendant jury trial and punitive damages that could
Further legal links
H-1B VISA’S can be minefield
One area of employment law that resembles a minefield concerns the H-1B
visa, offered to foreign employees when sponsored by companies to fill certain
professional or specialised positions in the US. Paul Virtue, former US
Immigration and Naturalization Service general counsel, now an employment law
specialist with Washington DC’s largest law firm, Hogan & Hartson,
highlights one pitfall which HR professionals should be aware of.
"When completing a Labor Condition Application for H-1B
employees, try and anticipate all the different sites where those individuals
may be required to work. This is particularly important for those needing to be
transferred during a multi-location project. Otherwise the Department of Labor
will need to approve a new LCA, to be posted in two conspicuous locations for
10 days, before the employee can begin working there.
"Usually approval takes less than a week, but if the DoL
experiences computer problems as it did earlier this year, the process can take
up to six weeks," says Virtue.
"The H-1B regulations are not particularly clear in
defining a temporary location – but the DoL has lots of firepower in its
enforcement arsenal and will issue fines for LCA violations. Always have a
valid LCA in place for each location where your H-1B workers may be required to
operate, including clients’ offices if relevant."